Release Date: May 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue in Q4 2023 was $10.1 million, a 20% increase over Q4 2022, with gross profit at $6.3 million, reflecting a 62% gross profit margin and a 75% increase over the previous year.
- Adjusted EBITDA for Q4 2023 was $0.8 million, marking a 358% increase from Q4 2022, demonstrating significant improvement in profitability.
- For the fiscal year 2023, revenue reached $51.7 million, a 91% increase over 2022, with gross profit at $26.6 million, about a 52% profit margin and a 130% increase over 2022.
- Adjusted EBITDA for the fiscal year was $5.4 million, a 378% increase over 2022, highlighting strong operational performance and efficiency gains.
- NowVertical Group Inc has a robust client portfolio with over 250 clients, including 100+ key accounts with major enterprises like Sky, Disney, and GlaxoSmithKline, indicating strong market penetration and customer trust.
Negative Points
- The revenue numbers for Q4 2023 and the fiscal year were impacted by a major currency devaluation in Argentina, leading to a 131% decrease in the Argentine peso from Q3 to Q4, which required a significant restatement of prior quarter results.
- A change in accounting policy from principal to agent for a newly acquired company led to a $5.9 million reallocation from cost of revenue to revenue, complicating financial reporting and impacting revenue recognition.
- The company faces challenges with 36% of AI projects failing to deliver results or ROI, and 85% being slowed down by organizational limitations, indicating potential risks in project execution and profitability.
- High levels of data complexity and a lack of knowledgeable staff in 82% of organizations pose significant challenges to NowVertical Group Inc's operations and service delivery.
- The company's significant reliance on acquisitions for growth could pose risks related to integration and maintaining a unified corporate culture.
Q & A Highlights
Q: Do you think it's necessary to make a capital increase to be able to face 2024?
A: Sandeep Mendiratta, CEO & Director of NowVertical Group Inc., clarified that there is no immediate need for a capital raise. The company has significantly improved its cash position and does not foresee any equity capital financing needs in the near future.
Q: Can you touch base a little bit on the leadership compensation and how it's correlated to the financial success of NOW?
A: Sandeep Mendiratta explained that the compensation structure is performance-driven, with each business unit being rewarded based on their performance. This approach will continue as the company becomes more integrated.
Q: Since you noted a positive move with EDC, can you provide an update regarding MVB?
A: Andre Garber, Founder, Chief Development Officer & Director, mentioned that the facility with MVB includes both a term loan and a line of credit, with about $0.5 million currently drawn from a total of $2 million available.
Q: Christine noted the focus on improving EBITDA margins. Do you also see moves to increase gross margins?
A: Sandeep Mendiratta responded affirmatively, stating that while the company aims for a gross margin of around 60% over time, a more immediate target for 2024 would be around 55% to 56%.
Q: Do you expect double-digit organic growth in 2024?
A: Sandeep Mendiratta expressed optimism about achieving double-digit organic growth but emphasized the importance of establishing a solid foundation through the integration of the company's various business units before providing specific growth guidance.
Q: Can you update the expected cash to be received from Audiense?
A: Andre Garber updated that the proceeds expected from Audiense, related to assets sold, amount to $2.2 million, to be received over a schedule extending to May 2025.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
